Seagate 2008 Annual Report Download - page 129
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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
15. Guarantees (Continued)
Product Warranty
The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally warrants its products
for a period of one to five years. The Company uses estimated repair or replacement costs and uses statistical modeling to estimate product
return rates in order to determine its warranty obligation. In addition, estimated settlements for customer compensatory claims relating to product
quality issues, if any, are accrued as warranty expense. Changes in the Company's product warranty liability during the fiscal years ended July 3,
2009 and June 27, 2008 were as follows:
16. Acquisitions
EVault, Inc.
In order to expand its current product and service offerings, in January 2007, the Company completed its acquisition of EVault, Inc.
("EVault") in an all cash transaction valued at approximately $186 million, which included approximately $2 million in estimated acquisition-
related expenses. EVault provides data storage services for small to medium size businesses, including online backup, data protection and
recovery solutions.
The purchase price had been allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective
estimated fair values on the acquisition date as follows (in millions):
Tangible net assets were valued at their respective carrying amounts as the Company believes that these amounts approximated their current
fair values at the acquisition dates. The fair value of identifiable intangible assets acquired reflects management's estimates based on, among
other factors, use of established valuation methods. Such assets consist of existing technology, customer relationships and trade names.
Identifiable intangible assets are amortized over their estimated remaining useful lives. The Company assigned $4 million to the value of
EVault's in-process research and development projects as at the acquisition date, all of which was written off in the period of acquisition.
Goodwill of approximately
127
Fiscal Years Ended
July 3,
2009
June 27,
2008
(Dollars in millions)
Balance, beginning of period
$
445
$
430
Warranties issued
263
255
Repairs and replacements
(243
)
(263
)
Changes in liability for pre
-
existing warranties, including expirations
(28
)
23
Balance, end of period
$
437
$
445
Tangible assets acquired and liabilities assumed
$
19
Identifiable intangible assets
41
In
-
process research and development
4
Goodwill
122
Total purchase price
$
186